You’ve just taken one of the most important steps in your career, you have completed the Self employed registration form and become self-employed! HMRC has been notified, and you are now your own boss. You feel great. It is now time to sit down and think about exactly what you need to make a huge success of this.
What are your new responsibilities?
You have your business plan, your clients and your vision, but what about the details that you are now responsible for? Well, if you were previously in an employed position, then you know that your employer took care of administration. This included your taxes. Now you are self-employed, the responsibility lies with you.
This is the part of self-employment that doesn’t fill most people with enthusiasm. It can be an added burden considering that you are busy running your business. It is for this reason that many self-employed individuals decide to hire an accountant to assist them. Ask yourself, “would an accountant benefit my business?”. Let’s have a look at a few ways that people have benefited from an accountant guiding them through their self assessment.
In 2015 890,000 people in the UK failed to turn in their tax return on time. If this is your situation, it can result in a fine from HMRC. Remember, not filing your self assessment return is illegal. You are also required to ensure you keep good records of your business dealings. HMRC have the right to ask you about something from several years ago. Failure to produce the correct record may result in a fine. This isn’t written with the intention of scaring you, it is just attempting to highlight what HMRC expect from the self-employed. It is for this reason that recruiting the help of an accountant can be a good idea. They will know exactly what is needed from HMRC, they will make sure everything is submitted on time, and correctly. It can save you plenty of time. This leaves you with a clear head, to run your business.
Pay Less Tax
Accountants are essentially experts on tax law. The result of hiring an accountant, can many times mean you pay less tax. This is not suggesting that you should get an accountant to weave some complex web of offshore companies. It is however a sound business decision to ensure that you don’t pay unnecessary amounts of tax on your income. Are you completely aware of all the allowable expenses that can apply to your tax return? If you look them up, they may surprise you. Equipment, mileage, and many other things can be claimed as expenses from the tax man. You could do some in depth research into exactly what you can and can’t deduct. Doing so, however, will reduce the amount of time you can commit to your business. An accountant will be able to remove this rather large workload from your shoulders, and make you “tax efficient”. They essentially are in the know of how much to claim for self employed people.
What about the costs of an accountant?
Now, let’s get down to brass tacks (not tax). An accountant will not work for free, it is going to cost you money. However, let’s look at the benefits against the cost. Firstly, we have discussed that often you will be paying less tax if an accountant does your tax return. Secondly, it will also make it so that you aren’t paying any fines to HMRC from late or wrong paperwork on your part. Thirdly, you will be able to focus more time and energy into, for instance gaining more clients, or improving your website. You want to use that extra time to improve your business. The argument can be made that hiring an accountant is a good business choice. The best part of it all is that the accountants fees can be claimed from your tax bill!
Unfortunately, there doesn’t exist some giant tax calculator that can magically solve all tax problems. The alternative is investing in an accountant. This will help your business to function smoothly. So why not think about looking for an accountant that suits your needs? Often, accountants have good business knowledge. This means that in the long run, they can be more than just someone who helps you with tax. Accountants can often become trusted business confidants, so.
Hope that this article has helped you gain insight into your taxes. And of course, food luck with your self-employment!